Challenging Public Bid Awards in Missouri Just Got Easier, Depending on Your Perspective
As reported in this blog in October, 2015 in the post The Making of a Supreme Court Case, we predicted that the Missouri Supreme Court would take the case of Byrne and Jones Enterprises, Inc. v. Monroe City R-1 School District. That case involved a contractor, Byrne and Jones Enterprises (“B&J”), which was convinced that a school district had improperly rejected its bid to construct a new athletic stadium. The bid was awarded to the high bidder with whom the school district had worked very closely in the pre-construction phase. B&J asked the Supreme Court to overturn the decisions of the trial court and Missouri Court of Appeals for the Eastern District of Missouri which had ruled against it. Those courts found that contractors, as a rule, have no vested interest or private property right in a contract award and, therefore, possess no standing to challenge the award to a competing bidder. The courts reasoned that since the bidding statute was enacted for the sole benefit of the public, taxpayers were the only parties with a right to challenge a bid award.
As anticipated, the Supreme Court did, in fact, take the case and issued its opinion on July 26, 2016. Thanks to the zealous contractor, B&J, the Supreme Court overturned previous Missouri cases in deciding that unsuccessful bidders do have standing to challenge a bid award. In doing so, the Supreme Court made an important distinction. A spurned contractor does have the right to contest a bid award on the grounds that it was not afforded a fair and equal opportunity to compete in the bidding process but does not have the right to a court order compelling a school district to award the contract to it.
Although B&J won the battle, it ultimately lost the war. The court found that even though B&J was wrongfully deprived of the right to challenge the fairness of the bidding process by the trial court, the decision of the trial court dismissing B&J’s case must stand, because the case is now moot. According to the Supreme Court, even though B&J asked the trial court to enjoin the school district’s bid award to its competitor, it didn’t actually seek a temporary restraining order or a preliminary injunction hearing. While the case made its way through the court system and ultimately to the Supreme Court, construction on the stadium was completed. The Supreme Court also agreed with the trial court that the bid statute does not allow a contractor to obtain a judgment for its bid preparation costs or other damages. Therefore, B&J ended up with nothing in the end.
B&J’s dedication to its cause has opened the door for contractors to dispute bid awards in Missouri. Contractors and their attorneys must operate expeditiously. Any contractor challenging a contract award must do so promptly and must seek an injunction preventing the construction process from moving forward or risk the case becoming moot. The most that a successful challenge will accomplish is a court order requiring the school district to alter its bid process to assure that all contractors, not just the complaining contractor, have a fair and equal opportunity to compete. The complaining contractor will not be entitled to a money judgment for its bid preparation costs or attorneys’ fees.